DRTV Execs Pitch Their Views to Lawmakers

Top direct response television industry executives had the opportunity to sell lawmakers their point of view at a Government Affairs fly-in on May 23 in Washington. On the agenda: to educate lawmakers about key issues with the potential to critically impact the DRTV, particularly net neutrality.

In a 2005 rulemaking, the Federal Communications Commission declared that providers of cable modem access to the Internet are not considered common carriers, and are thus subject to a lower standard of regulation, even if they attempt to provide tiered access to the Internet for content providers.

"Access-tiering" would allow carriers to auction bandwidth to the highest bidders, and leaving other content providers with insufficient bandwidth to compete.

The Electronic Retailing Association, along with many Internet experts and a diverse coalition of content providers from Moveon.org to the Christian Coalition, supports the introduction of legislation to prevent telecommunications companies and cable operators from discriminating against smaller content providers.

The House Committee on Energy and Commerce has reported legislation designed to prohibit discrimination in providing access to the Internet, but it would only be enforceable in federal courts and would leave the 2005 FCC rule standing. The Committee rejected language offered by Rep. Ed Markey (D-MA) that would have established an affirmative net neutrality obligation on broadband providers, enforceable by the FCC. The Senate Committee on Commerce, Science and Transportation is considering net neutrality proposals and both the House and Senate Judiciary Committees have indicated they will address the issue.

Senator Ron Wyden (D-OR) helped ERA members frame the debate during his keynote speech at Tuesday's conference. He said that despite the fact that the telecom and cable companies are trying to make this an issue of "no government regulation," a stance popular with Congress' Republican majority, the real issue is one of discrimination, because access tiering will discriminate against smaller, innovative content providers.

There's also the problem of competition at the consumer end, since broadband access is basically a duopoly; 94 percent of U.S. households only have their telephone or cable company to choose from, which limits true competition.

"Equal open access at reasonable cost must be the cornerstone of the Internet going forward," said ERA Chairman Jeffrey Knowles, a partner with Washington law firm Venables LLP.

Other issues of concern to the DRTV industry include National Data Security Legislation and legislation to implement the Streamlined Sales Tax Agreement. The ERA supports Congressional efforts to establish national data security standards, as it would alleviate the costs businesses would need to incur to comply with various state laws, but with the following provisos: the legislation clearly defines what data is being protected, under what circumstances businesses would be required to notify consumers in the event data is lost or stolen; if a business encrypts consumer data in its possession there is a presumption that identity theft would not occur and if businesses comply with an FTC mandated information security program they will not be subject to civil penalties if a third party is responsible for the security breach.

The ERA opposes the Streamlined Sales Tax Agreement in its current form because it will significantly increase the cost and complexity of compliance for interstate retailers. Mandatory tax collection under the SSTA would result in merchants having to collect sales tax for over 7,500 local tax jurisdictions, and since the agreement allows each state to impose two different tax rates, the number essentially doubles.

Over on Capitol Hill, Steve Armstrong, executive vice president and general counsel at Home Shopping Network, as well as an ERA Board Member, found that with the legislators he visited, positions on net neutrality was "falling around party lines," with Republicans being against any neutrality language and Democrats being for it.

Industry leaders tried to point out the effect on legislators' constituents.

"We want them to understand that we're businesses and businesses are consumers," said Sigi Friedman, ERA vice president of international committees and councils.

ERA board member Richard Stacey, president/CEO of Northern Response International Ltd., took it a step further: "Either consumers are going to pay with their pocket, or they're going to pay with their jobs."

Bill McClellan, director of government affairs at the ERA, was pleased with how the day went.

"We had great participation from ERA's membership who visited with over 26 legislators on net neutrality, data security and streamlined sales tax," Mr. McClellan said. "Without a doubt members of Congress listen far more carefully to the messenger when they are also a constituent. The day was a win for the industry by any standard."